Aon International Energy, Inc. (“Aon Energy”) has entered a $36,000 settlement with the Office of Foreign Assets Control (“OFAC”) after allegations that the broker violated the Iranian Transactions Regulations.  Aon Energy served as a broker on behalf of a European reinsurance company and placed facultative retrocession reinsurance with two European retrocessionaires.  OFAC alleged that Aon Energy facilitated the placement of coverage and payment of premiums for facultative retrocession reinsurance, which reinsured construction risks associated with petrochemical projects on Kharg Island in Iran.

According to OFAC, the amount of the penalty reflected both the seriousness of the violation as well as Aon Energy’s subsequent efforts to strengthen its compliance program. OFAC considered the transactions at issue to be particularly harmful to the sanctions program and Aon Energy’s actions were reckless in connection with the policies issued.  However, Aon Energy’s willingness to strengthen its OFAC compliance program and procedures, as well as its commitment to cooperate with OFAC, appeared to mitigate the severity of the penalty.

This is the first public announcement of an OFAC enforcement action involving the reinsurance sector.  For previous blog posts on OFAC enforcement in the banking industry please click here and here.